Health Policy Commission - New Agency on the Block

There’s a new agency on the block, and its task is to transform health care regulation in the Commonwealth. The Health Policy Commission (“HPC”) was created by Chapter 224 of the Acts of 2012. The HPC is an independent agency, nominally housed within the Executive Office of Administration and Finance. It is governed by an 11-member Board, consisting of the Secretary of Administration and Finance and the Secretary of Health and Human Services, each ex officio, and three members appointed respectively by the Governor, the Attorney General and the Auditor. The Board has a diverse membership of doctors, health economists, business representatives, and others. It is chaired by Dr. Stuart Altman, Professor of National Health Policy at Brandeis University and a member of the Board of Tufts-New England Medical Center. David Seltz, a veteran Beacon Hill staffer and health care advisor to Governor Patrick, was appointed the HPC’s Executive Director.

Setting an annual health care cost growth benchmark. This benchmark is a target maximum growth rate for average per person health care costs and is pegged to dovetail with growth in state GDP (known as “the potential growth state product”). The HPC must set the benchmark annually, based on a statutory formula, and then monitor those providers whose costs are in excess of the figure. It may require that providers whose costs exceed the benchmark file performance improvement plans that identify cost-saving measures.

Administering a provider organization registration program. Provider organizations will be required to submit information about their organizational structure, finances, and risk allocation in order to register. Additionally, certain “risk-bearing provider organizations” will require certification and examination by the Division of Insurance.

Conducting cost and market impact reviews of proposed material changes to the governance or operational structure of health care providers (such as mergers and acquisitions). Already, the HPC has adopted interim guidance on this regulatory authority. Pursuant to Chapter 224, the HPC must collect “notices of material change” from providers prior to the provider enacting a proposed change in governance or operations. HPC then reviews the notice, and if it finds that the proposed change is likely to significantly impact cost or market concentration, it may conduct a cost and market impact review, and in certain extreme cases, refer the matter to the Attorney General. The HPC has already initiated its first cost and market impact review – examining the merger between Partners Healthcare System and South Shore Hospital.

Registering, regulating, and offering grants to incubate Accountable Care Organizations, Patient Centered Medical Homes, and other innovative health care delivery models that adopt “alternative payment methodologies.” “Alternative payment methodologies” generally refer to health care payments that depart from the traditional “fee for service” model. Chapter 224 requires public health care programs, such as the Group Insurance Commission and the Commonwealth Health Insurance Connector Authority, to enroll most of its members in such “alternative payment” contracts over the next several years, while private health plans are offered incentives to follow suit.

Overseeing several trust funds that offer competitive grants, including the Distressed Hospital and Prevention and Wellness Trust Funds. These funds, as well as the HPC itself, are funded, in large measure, by a one-time surcharge assessment on qualifying acute hospital systems and health care payers.

Taking responsibility for administration of the Office of Patient Protection from the Department of Public Health.

The HPC has been meeting monthly, as have its four subcommittees:

The Care Delivery and Payment System Reform Committee.

The Community Health Care Investment and Consumer Involvement Committee.

The Cost Trends and Market Performance Committee.

The Quality Improvement and Patient Protection Committee.

The next HPC meeting is June 19, at One Ashburton Place, 21st Floor, Boston, MA. More information can be found at the HPC’s website, www.mass.gov/hpc, or its twitter feed, @Mass_HPC.